Ethics or Competence

[Doug Smith SRA]

People Pleasing

When the discussion of flipping was rife, the paradox emerged that many appraisers who played along with the schemes did not in the end have venial attributes and did not gain anything other than their fees and some work.

I had to confront the appraiser's dilemma head on when I made the transition from 32 years in the hotel business. In the hotel business, hard work pays off with happy customers. When I got into appraising and worked hard, I quickly found my hard work sometimes made clients very unhappy. Therein lies the root cause of why many lose their objectivity.

The loss of objectivity is not always from venial, unethical leanings, it is the result of being unable to reconcile the true goal of an appraisal with the objectives of the client. No one likes criticism or anger directed towards them. It is less to do with a weak moral compass and more to do with emotional stability.

I agree that a moral compass trumps emotional stability but some enter into appraising without fully understanding that appraising is not people pleasing work.

On the competency side, where not much is expected, not much is given. In the early days, I sat through USPAP classes and Appraisal classes expecting that clients actually wanted reports prepared the way I was learning about. Competency comes about when competency is expected. Sadly, huge segments of the appraisal market have no regard and no expectation for competency.

Doug

 

[Mike Boyd]

The problem is, that ethics must be taught at the same time you are developing your self esteem, and most educators think that those two are mutually exclusive, which is to say most "modern day thinkers" will say that teaching a child ethics will stunt their self esteem.

Are you serious? If so, I would have to disagree vehemently. My observation is that people with healthy self esteem are highly ethical. Notice I said HEALTHY self esteem. Ego maniacs are generally sociopaths, many of which do not know the meaning of ethics. People with extremely LOW self esteem find it difficult, if not impossible, to say NO to anyone.

 

[xmmcsmielr]

Ethical Failures Are Not Venial

VENIAL (adjective): of a kind that can be remitted; FORGIVABLE, PARDONABLE; also: meriting no particular censure or notice; EXCUSABLE.


The really lousy appraisal reports that I've seen in Arizona certainly do NOT meet Webster's "venial". Those reports deserve censure for their ethical voids.


COMPETENCE (noun): 1: a sufficiency of means for the necessities and conveniences of life; 2: the quality or state of being competent, as a: the properties of an embryonic field that enable it to respond in a characteristic manner to an organizer, and b: readiness of bacteria to undergo genetic transformation; 3: the knowledge that enables a person to speak and understand a language.

ETHICS (none): 1: the discipline dealing with what is good and bad and with moral duty and obligation; 2a: a set of moral principles; a theory or system of moral values; 2b: the principles of conduct governing an individual or a group; 2c: a guiding philosophy; 2d: a consciousness of moral importance; 3: a set of moral issues or aspects (as rightness).


Webster's "ethics" seems significantly more applicable to the appraisal profession's criminal element than "competence". Actually the "lack of ethics" and the "lack of competence".

So, ethics are more important than competence. Certainly knowing what you're doing, when appraising a property, is the foundation of a USPAP compliant report. However, without ethical (honest) appraising, USPAP becomes nothing more than an ignored set of rules. Knowing what to do, and not doing it on purpose, is much worse than not knowing what to do in the first place.

And, Mike Boyd responded to larryroscoe1's questionable allegation that teaching children ethics destroy self esteem. How could that possibly be the case? Mike Boyd's experience ... "that people with healthy self esteem are highly ethical" ... is exactly what my interactions with others demontrate.

 

[Mr Rex]

Larryroscoe is regurgitating the manifesto from those communistas that run the education system across the country.

 

[Pamela Crowley (Florida)]

The greater problem is that the system is set up to reward incompetent and unethical appraisers. To add insult to injury, with the advance of the AMCs many times work goes to the lowest bidder. So you have a system that rewards the unethical, imcompetent and for the most part least experienced.

IMO 2/3 of the Appraisers out there are very honest, competent appraisers, just like most professions. But unlike most professions, these 2/3 are pushed to the side because the other 1/3 are sought out and are doing the majority of the work.

Focusing on the individual bad appraiser will never irradicate the problem, just like the drug war, get rid of the corner dealer, and another one will take his place because there is a demand for it. As appraisers we need to constantly point this out instead of throwing the profession under the bus, no need for us to do that, the system does it for us.

So true.

What a wonderful thread full of truths.

 

[moh malekpour]

One is a learning process and experience; the other is a personality development, a belief system and the personal integrity. Appraisal is not a brain surgery. Anyone with an average IQ can learn how to do a decent appraisal. It is very hard and sometimes impossible to change an unethical person to an ethical.
The most dangerous one is the one who is skillful and unethical. That one may last for a long time and causes lots of damage because it is hard to find what that person did but when it is found, it is going to be real big.
Unethical and incompetent one won't last too long . It is like a dumb burglar or bank robber who leaves evidence like photo in camera or a piece of document behind.

 

[Don Clark]

I would like to hear from some of our instructors on the forum regarding the topic of ethics in appraising. Do you USPAP instructors emphasize ethics or do you not mention it at all. It seems to me that an ethics component could or should be included in every class.

I can only speak for myself. Yes, I do. I go beyond what is contained in the ethics rule. I will, with your permission, steal your categories of ethics and competence. I also agree that competence can be fairly easily obtained, even geographic competence. Ethics is not so easy. If you are ethically challenged as a person, you aill likely be ethically challenged regardless of your profession.

 

[Mr Rex]

I can only speak for myself. Yes, I do. I go beyond what is contained in the ethics rule. I will, with your permission, steal your categories of ethics and competence. I also agree that competence can be fairly easily obtained, even geographic competence. Ethics is not so easy. If you are ethically challenged as a person, you aill likely be ethically challenged regardless of your profession.

I know NC has a RE Sales/Broker required ethics class that was added in the last few years (I am one), and anectdotally, their ethics have gotten worse IMHO.

 

[Don Clark]

I know NC has a RE Sales/Broker required ethics class that was added in the last few years (I am one), and anectdotally, their ethics have gotten worse IMHO.

It's the old "You can take a horse to the water but you cannot make them drink" philosophy. You can teach ethics, ethical conduct, ethical concepts, but you cannot make a person be ethical. When I use to teach USPAP long before the AQB required that we be certified, and while teaching for McKissock, the first page in the text was a well known commentary by an author whose name I have now forgotten. it was called "Everything I ever needed to know I learned in Kindergarten". That is true of ethics and much of life as far as personality and ethics are concerned. I too am a Realtor in north carolina and have taken their ethics class. I brought up what to me was an ethical issue to the instructor. The way he danced around the issue would make Michael Jackson proud. Also, if the NAR was really interested in ethics when it comes to valuations, why did they remove the information relative to USPAP from their code of ethics?

 

[xmmcsmielr]

Hank knew the solution.

So, NAR fails to instill ethical behavior in its brokerage membership ...

What about appraisers? What's the solution to widespread unethical behavior among appraisers? ... And, there IS widespread lying going on among appraisers. Nothing much has changed, because mortgage loan originators are still insisting on "we need at least" values and "you cannot check 'declining' values" reports.

I think a solution to at least slow down the frequency of lousy reports is enforcement. I've been soap boxing ... ranting ... about the lack of enforcement in Arizona for years.

As many of you know, the Arizona Board of Appraisal has a very poor history of USPAP enforcement. It operates with a self imposed rule that it will not investigate a case, unless a copy of an appraisal report is provided with a complaint, even though there is overwhelming evidence of mortgage fraud from MLS records, from public recordations and from witnesses.

Fifteen years ago, SRA Hank Carlston told me, "Rich, I could clean the situation up in one year with six honest and experienced investigators. We would field audit offices and shut the bad ones down."

Hank is right. A team of investigators, who visit appraisal offices, conducting unannounced audits, followed by court injunctions to halt work at offices with egregious levels of appraisal fraud and by Board of Appraisal revocations of licenses and certifications, would make the rest of the regulated community comply with the rules, if the Board communicated the penalties imposed via a monthly newsletter (email).

Don't hold your breath ... it will never happen, at least not in Arizona.

So, if I was a mortgage lender I would require two appraisals for every loan secured by Arizona real estate, and I might avoid funding Arizona mortgages all together, because there really is no enforcement of USPAP in the Grand Canyon state and risk is high. Lotsa foreclosures going on, partly due to poor USPAP enforcement.